PPPs are an unnecessary long-term risk

Forcing government agencies to consider public private partnerships (PPPS) for projects over $25 million could lead to unnecessary and expensive long term-risks, says the Public Service Association (PSA). 

“A range of private procurement options already exist,” says PSA National Secretary Richard Wagstaff. “The government has no convincing arguments as to why these contracts should be altered in favour of private operators to the point where ownership and control of state projects is handed over to them.”

“The government is once again presenting PPPs as a more efficient, value for money option but international evidence suggests these assumptions are wrong.

“Rigid, long-term contracts with private providers can hamper planning around demographic or social changes and prevent timely responses to technological advances, natural disasters or new illnesses.

“Paying for facilities that are no longer needed or being unable to redistribute resources are just some of the risks PPPs bring. The government fails to highlight these risks,” says Richard Wagstaff. 

The PSA supports the CTU’s view that private public partnerships bring huge financial risks to the government and taxpayers as well as a loss of public control over services and facilities.

“Private companies are answerable to their shareholders while public services are accountable to both government and the public. New Zealand presently ranks as one of the most trusted and corruption-free state sectors in the world but PPPs can erode that accountability and transparency,” says Richard Wagstaff

The UK Commission on Public Private Partnerships found that many PPPs offered marginal value for money gains and failed to deliver promised innovations in the design and organisation of services.

The New Zealand Treasury has itself said that PPP tendering costs can be triple those of other procurement options.

“The only reason to choose PPPs over other procurement options is to provide additional profit making opportunities for private companies at the taxpayer’s expense,” says Richard Wagstaff.

ENDS

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